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1/7 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 24th DAY OF JULY 2018
PRESENT
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
AND
THE HON’BLE Mrs.JUSTICE S.SUJATHA
I.T.A.No.547/2016 BETWEEN:
PR. COMMISSIONER OF INCOME TAX-7 BMTC COMPLEX, KORMANGALA BANGALORE.
INCOME TAX OFFICER WARD-7(1)(4), BANGALORE.
…APPELLANTS (By Mr. E.I. SANMATHI, ADV.)
AND:
M/S. ZYME SOLUTIONS P. LTD. No.38/1/23, VENKATAMMA COMPLEX SOUTH END ROAD, BASAVANAGUDI BANGALORE-560004 PAN: AAACZ2465R.
…RESPONDENT (By Mr. NARENDRA KUMR J. JAIN, ADV.)
THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T. ACT 1961, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULTED BY THE HON’BLE COURT AS DEEMED FIT AND SET ASIDE THE APELLATE ORDER DATED 22/01/2016 PASSED BY THE ITAT, ‘B’ BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE’S CASE, IN APPEAL PROCEEDINGS IN IT(TP)A No.465/BANG/2015 FOR A.Y. 2010-11
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& GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.
THIS I.T.A. COMING ON FOR FURTHER ORDERS, THIS DAY S. SUJATHA J. DELIVERED THE FOLLOWING:-
JUDGMENT
Mr. Sanmathi E.I. Adv. for Appellants - Revenue Mr. Narendra Kumar J. Jain, Adv. for Respondent - Assessee
The Appellants-Revenue have filed this appeal u/s.260A of the Income Tax Act, 1961, raising purportedly certain substantial questions of law arising from the order of the ITAT, Bangalore Bench ‘B’, Bangalore, dated 22.01.2016 passed in IT(TP)A No.465/Bang/2015 (M/s.Zyme Solutions P. Ltd., vs. Income-tax Officer) for A.Y.2010-11.
The proposed substantial questions of law framed in the Memorandum of appeal by the Appellants-Revenue are quoted below for ready reference:- “1. Whether on the facts and in the circumstances of the case, the Tribunal erred in
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holding that M/s. Accentia Technologies Ltd., is different from assessee – company, when it satisfies all the qualitative and quantitative filters applied by the TPO and the Tribunal has used a narrower functionality filter that the TPO, but has not tested other comparables against the narrower functionality filter applied by it? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in not setting aside the matter to the TPO for fresh Transfer Pricing study after taking a new view on functional matrix which is narrower than the functionality matrix originally used by the TPO? 3. Whether on the facts and in the circumstances of the case, changes in any filter – either qualitative or quantitative – by any appellate authority should be followed by fresh TP study, or whether the Tribunal can selectively apply their modified qualitative filter to only few comparables challenged by the assessee, or whether a fresh TP study has to be done?”.
The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and the Respondent-assessee, has given the following findings against Revenue with regard to various issues raised
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before it with regard to ‘Transfer Pricing’ and ‘Transfer Pricing Adjustments’ made by the concerned authorities below. We consider it appropriate to quote the relevant portions hereunder:-
“ 27. We have perused the orders and heard the rival contentions. What was held by this Tribunal in the case of Rampgreen Solutions P. Ltd (supra) is reproduced here under:
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There is no dispute that assessee was providing ITES to its principal abroad. The profile of M/s.Rampgreen Solutions P. Ltd compares favourably with that of assessee’s since they were also a wholly owned subsidiary company of an US company and was providing ITES to such principal. Assessment year involved was also very same. We are therefore of the opinion that the above directions of the Tribunal would squarely apply here also. We direct the lower authorities to exclude Accentia Technologies Ltd., from the list of comparables”.
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However, this Court in a recent judgment in ITA No.536/2015 C/w ITA No.537/2015 delivered on 25.06.2018 (Prl. Commissioner of Income Tax & Anr. Vs. M/s. Softbrands India Pvt. Ltd.,) has held that in these type of cases, unless an ex-facie perversity in the findings of the learned Income Tax Appellate Tribunal is established by the appellant, the appeal at the instance of an assessee or the Revenue under Section 260-A of the Act is not maintainable. The relevant portion of the said judgment is quoted below for ready reference: “ Conclusion: 55. A substantial quantum of international trade and transactions depends upon the fair and quick judicial dispensation in such cases. Had it been a case of substantial question of interpretation of provisions of Double Taxation Avoidance Treaties (DTAA), interpretation of provisions of the Income Tax Act or Overriding Effect of the Treaties over the Domestic Legislations or the questions like Treaty Shopping, Base Erosion and Profit Shifting
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(BEPS), Transfer of Shares in Tax Havens (like in the case of Vodafone etc.), if based on relevant facts, such substantial questions of law could be raised before the High Court under Section 260-A of the Act, the Courts could have embarked upon such exercise of framing and answering such substantial question of law. On the other hand, the appeals of the present tenor as to whether the comparables have been rightly picked up or not, Filters for arriving at the correct list of comparables have been rightly applied or not, do not in our considered opinion, give rise to any substantial question of law. 56. We are therefore of the considered opinion that the present appeals filed by the Revenue do not give rise to any substantial question of law and the suggested substantial questions of law do not meet the requirements of Section 260-A of the Act and thus the appeals filed by the Revenue are found to be devoid of merit and the same are liable to be dismissed.
We make it clear that the same yardsticks and parameters will have to be applied, even if such appeals are filed by the Assessees, because, there may be cases where the Tribunal giving its own reasons and findings
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has found certain comparables to be good comparables to arrive at an ‘Arm’s Length Price’ in the case of the assessees with which the assessees may not be satisfied and have filed such appeals before this Court. Therefore we clarify that mere dissatisfaction with the findings of facts arrived at by the learned Tribunal is not at all a sufficient reason to invoke Section 260-A of the Act before this Court. 58. The appeals filed by the Revenue are therefore dismissed with no order as to costs.”
Having heard the learned counsels for the parties, we are therefore of the opinion that no substantial question of law arises in the present case also. The appeal filed by the Appellants-Revenue is liable to be dismissed and it is dismissed accordingly. No costs.
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